AMD Settles Patent Suit ‘For Our Customers’

AMD has announced the settlement of patent claims with Intergraph in an agreementthat calls for AMD to pay Intergraph US$10 million, plus 2 percent of profits from its microprocessor sales for three years. The maximum payment from AMD is to be capped at $25 million.

In return, Intergraph will grant AMD a license for its “Clipper” microprocessor patents. The company also will drop all claims of infringement against AMD customers who use AMD processors.

AMD spokesperson Drew Prairie told the E-Commerce Times that the company believes financial terms of the agreement are fair. “We wanted protection for our customers,” he said. “That makes it worth it.”

Comfortable in Court

Intergraph first developed the Clipper processor for workstations and later switched to Intel chips.

However, the patents the company obtained while developing Clipper became the basis for suits filed against AMD, Dell, Gateway, Intel and Hewlett-Packard. Those patents relate to computer-system memory management technology.

In January, AMD filed a declamatory patent action against Intergraph, asserting that the Clipper processor patents were not valid and that AMD was not infringing on any microprocessor technology.

Commenting on the latest settlement in a press release, Intergraph president and CEO Halsey Wise said: “We are pleased to have resolved our patent issues with AMD. We believe this agreement is in the best interests of our shareholders based on all of the circumstances, including the scope of AMD’s alleged infringement and damage base.”

Customer Care

The main reason why AMD settled the suit, according to Prairie, was a concern that Intergraph suits against AMD customers would be detrimental to both customers and the company.

“This agreement passes on the protection of the settlement to customers,” he said. “They can use AMD without worrying.” Intergraph also had pending lawsuits that involved infringement claims against computers equipped with AMD chips, but those suits will now be dropped, he noted.

Intergraph’s suits against other technology companies have produced a passel of results, all in Intergraph’s favor.

For example, Intel settled a patent infringement claim by paying $300 million to Intergraph. Then, last month, Intel agreed to pay Intergraph $225 million to settle claims left over from that judgment. That interchange could keep Dell out of the litigation hotseat, since Dell has an indemnification agreement with Intel.

Gateway and HP may not be as fortunate as Dell. Their cases are still pending, with both expected to be heard in August. However, it is possible that the agreement with AMD will keep them out of trouble. Prairie noted that both companies sell AMD chips in their computers, a fact that could affect judgments and settlements.

Growing Trend

The AMD-Intergraph case, like the recently settled Microsoft-InterTrust lawsuit,illustrates a larger trend in the technology industry. Embarking on patent-infringement suits is an increasingly accepted strategy for protecting intellectual property, and the rate of suits like those launched by Intergraph will not slow anytime soon, according to experts.

Steve Frank, a partner in the patent and intellectual property group of Boston-based law firm Testa Hurwitz & Thibeault, told the E-Commerce Times that technology companies have become more protective of intellectual property than they once were. Also, whereas copyright was sometimes used for software and other products in the past, patents are now being utilized much more.

One encouraging factor for companies that want to use patents to protect themselves is the fact that judges are increasingly tolerant, and even approving, of the tactic.

“This is a very long-term trend,” he said. “It used to be that the courts viewed patents with suspicion, because [they] created a monopoly. But now they see them as a way to protect innovation.”